Emmer-led GOP effort questions transparency of Federal Reserve digital currency project

U.S. Rep. Tom Emmer (R-MN) led eight of his Republican colleagues in requesting details about Project Hamilton, an initiative to research the development of a central bank digital currency (CBDC) by a Federal Reserve bank.

Project Hamilton is a collaboration between the Federal Reserve Bank of Boston and the Digital Currency Initiative at the Massachusetts Institute of Technology to research the potential creation of a CBDC in the United States.

“It was brought to our attention that some firms participating in the collaboration may be planning to use Project Hamilton to research, develop, and scale CBDC products with the intent to then sell those products to commercial banks,” wrote Rep. Emmer and the lawmakers in a Dec. 1 letter sent to Susan Collins, president and CEO of the Federal Reserve Bank of Boston.

“It is important that the firms engaging with Project Hamilton do not receive an unfair competitive advantage over current or future competitors,” they wrote. “Neither the federal government nor the Federal Reserve banks should be in the business of picking winners and losers in the private markets.”

Among those who joined Rep. Emmer in signing the letter were U.S. Reps. Bill Huizenga (R-MI), Ann Wagner (R-MO), Andy Barr (R-KY), French Hill (R-AR), and Anthony Gonzalez (R-OH).

According to the congressional lawmakers, if the CBDC is not crafted with the values of transparency in mind, the currency could fall at risk to the financial privacy violations currently on display in China.

“Any U.S. CBDC must be open, permissionless, and private,” Rep. Emmer said in a statement, pointing out that the more that’s learned about the Boston Fed’s work on Project Hamilton, the more concerned lawmakers have become regarding a lack of transparency. 

“The unfair advantage that some private companies could enjoy from this partnership and the failure to ensure the principles of privacy, sovereignty, and free markets should be concerning to every American,” he said.

In their letter, the members wrote that due to “insufficient visibility into the interaction between Project Hamilton and the private sector,” they want details about Project Hamilton’s funding and engagement with the private sector as the bank seeks to develop a CBDC.

Rep. Emmer and his colleagues also questioned Collins about how the Fed plans to address concerns regarding the dangers a CBDC could pose to financial privacy and financial freedom, and if firms involved in the project are able to exploit regulatory advantage over competitors, among other questions.